Wednesday, May 13, 2015

Crane Highlights Energy Diversity, Markets & Trade in Nuclear Industry Keynote

Chris Crane
Christopher Crane is president and CEO of Exelon Corporation, and chairman of the Nuclear Energy Institute. This morning he spoke at NEA 2015 where he offered remarks to the state of the nuclear industry and its future. Below is a summary of his remarks. Click here for the full text.

Chris Crane made it clear from the outset of his address before more than 850 industry leaders this morning that the U.S. nuclear industry is at the top of its game. The latest WANO performance indicators clearly show the industry not only operated at-or-near record-setting levels in 2014, but has been doing so for a decade or more.

But Crane didn’t shy away from pointing out that there is a lack of recognition of “the importance of a diverse electricity supply” that poses serious ramifications for the nation.
Energy diversity is taken for granted and—if current trends continue—that diversity is seriously at risk.

Coal-fired generating capacity is declining. The U.S. has about 300,000 megawatts of coal-fired capacity. About 60,000 megawatts will shut down by 2020 because of tighter environmental requirements, and the Environmental Protection Agency’s proposed rule to reduce carbon emissions could lead to the retirement of another 40,000 to 45,000 megawatts of coal-fired capacity.

Since 1995, approximately 75 percent of all new electric generating capacity has been natural gas. Gas is clearly part of our nation’s strength in energy resources, but overreliance on gas could expose consumers of natural gas and electricity to price volatility and loss of reliability.

Renewables will play an increasingly large role but, as intermittent sources, they cannot displace the need for base-load generating capacity, absent dramatic advances in energy storage.
To prove his point, Crane cited a study done by IHS Energy, The Value of U.S. Power Supply Diversity released in July 2014 that compared the cost of generating electricity with the current generating mix against a less diverse system. The study’s conclusions are sobering.
IHS Energy examined the impact of energy diversity—or the lack of it—in a study sponsored by NEI, the Edison Electric Institute and the U.S. Chamber of Commerce. IHS compared the cost of generating electricity with the current generating mix and with a less diverse system.

In the lower-diversity case, the cost of generating electricity was $93 billion higher per year. Retail electricity prices were 25 percent higher. And the typical household’s annual disposable income was around $2,100 less. The effects would be similar to an economic downturn, according to IHS.

We need to intensify our efforts to increase awareness of the value of fuel and technology diversity in our electricity supply—and what is at risk if the U.S. stays on its current path.
To avoid the above scenario, another key priority for the nuclear industry is to create a level playing field so nuclear energy’s attributes are clearly recognized and valued. What are those attributes? Nuclear power plants achieved a record-high capacity factor of nearly 92 percent in 2014, as they have done since 2002 while operating in all kinds of weather conditions. And the linchpin to that performance is a direct consequence of the emphasis on safety.

Yet in spite of these accomplishments, nuclear generation, especially in competitive electricity markets, finds itself in a position of stepping into the batters’ box with two strikes before a pitch is thrown. As Crane sees it:
Market reform is essential so that nuclear energy’s attributes are properly valued and compensated. There are limited signs of progress—but much more remains to be done, and the time for action is now. We can ill afford the premature shutdown of more nuclear plants simply because of the economic strain resulting from poorly designed markets.

Regardless of the market structure, policymakers should consider transforming renewable portfolio standards into clean energy portfolio standards so that all carbon-free energy sources are treated equally.
Crane discussed the need for the Nuclear Regulatory Commission to prioritize its regulatory structure based on safety to allow nuclear plant operators to focus on “the most important work.” He also made a strong case for Congressional support for international trade in commercial nuclear technologies.
With 69 nuclear reactors under construction around the world and 183 new nuclear plant projects in development stage, commercial opportunities for U.S. vendors and suppliers increasingly are in international markets. Strategic national objectives are also in play. U.S. participation in the world market strengthens our ability to influence safety and nonproliferation policy and practices, and we can export our operational expertise.

NEI encourages the U.S. government to pursue a comprehensive nuclear energy trade policy recognizing that nuclear energy is a strategic asset in U.S. foreign policy. Key attributes of this policy include reform of U.S. export controls, enhanced export financing, facilitation of bilateral trade agreements with key trading partners, and development of workable international nuclear liability regimes.
The U.S. nuclear industry can point with pride at its accomplishments and has “an extraordinary value proposition” as Crane indicates throughout his address. Only an industry-wide effort and eternal vigilance will carry that message forward.

Editor's Note: For all of the latest from NEA 2015, please follow @NEI on Twitter as well as the #NEA2015 hash tag.

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